Goldman Sachs chairman and CEO Lloyd Blankfein and the company's president and COO Gary D. Cohn at Cooper Union college where President Barack Obama delivered a speech on financial regulation Thursday.

“Sounds like we will make some serious money,” one manager e-mailed. “Yes we are well positioned,” his colleague responded, referring to the fact that the investment firm had bet against the mortgage market.

Such revelations are red meat to those on Capitol Hill pushing financial reform.

“Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis,” said Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, in a statement.

“They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities, and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients,” said Sen. Levin.

Goldman Sachs officials are to appear before the investigative subcommittee Tuesday.

Lessons from Detroit

Meanwhile, as Republicans and Democrats maneuver toward Wall Street reform, President Obama says a look at Detroit is instructive – both as a caution and also as a guide to what government can do to help clean up an economic mess.

“Many believed this was a fool’s errand,” Obama said in his radio/web address Saturday. “But we decided that while providing additional assistance was a risk, the far greater risk to families and communities across our country was to do nothing.”

Obama points to improvements in the auto industry since then: added jobs, loan payback, and profitability at Chrysler for the first time in three years.

But for Obama, the segue from Detroit to Wall Street is clear: “Part of what led to the crisis in our auto industry – and one of the main causes of the economic downturn – were problems in our financial sector. In the absence of common-sense rules, Wall Street firms took enormous, irresponsible risks that imperiled our financial system – and hurt just about every sector of our economy.”

Congressional debate

In Congress, debate on financial reform could begin as soon as Monday.

While Republicans acknowledge the need for reform, they’re resisting Democratic efforts to push ahead on a bill authored by Senate Banking Committee Chairman Christopher Dodd. That bill includes a new consumer protection agency, a regulatory council to monitor risk in the financial system, and a fund paid for by the financial industry that would be used to liquidate failed financial firms.

The first maneuver is likely to be a cloture vote to halt a possible GOP filibuster.

Nobody wants to be seen as “bailing out” big banks and other financial institutions.

“Republicans are working to ensure the bill would forbid any future bailouts of Wall Street banks,” Texas Sen. Kay Bailey Hutchison said in the Republican weekly radio and internet address Saturday. “The idea that a financial institution is ‘Too Big To Fail’ perverts free market capitalism. It suggests that large firms can privatize their profits, yet socialize their risks.”